Business Directories

Boeing nets $1bn earnings in Q3

Washington, October 25, 2012

Boeing has posted stronger-than-expected results for the third quarter earning $1 billion ($1.35 a share) as its defence business improved and commercial aircraft deliveries surged, and the company raised its full-year forecast for the third time this year.

Boeing is churning out cash as it delivers more jets to customers, and it took the opportunity on Wednesday to say that "first and foremost" it intends to give money back to shareholders through dividends and share buybacks.

But the solid report was tempered by pension costs that appeared to be rising more than expected. Boeing forecast that pensions will cost $3.5 billion next year, 40 percent more than in 2012, as its obligations rise largely because of low interest rates.

"That's going to be a cash-consuming item, and it probably caught some people by surprise," said Russell Solomon, a credit analyst at Moody's Investors Service. "This is a problem that's not going to get better unless interest rates start to rise."

Boeing raised its full-year earnings forecast to a range of $4.80 to $4.95 a share, compared with $4.40 to $4.60 previously.

It said revenue should reach $80.5 billion to $82 billion this year, driven by more sales in the defense, space and security businesses. Revenue in 2011 totaled $68.7 billion.

The company said it was on track to deliver up to 600 commercial jets this year, compared with 477 in 2011.

In the quarter, it earned $1.0 billion, or $1.35 a share, compared with $1.1 billion, $1.46 a share, a year earlier. Revenue rose to $20.0 billion from $17.7 billion.

Analysts surveyed by Thomson Reuters I/B/E/S had expected earnings per share of $1.13.

"Boeing is getting pretty good at this," Robert Stallard, an analyst at RBC Capital Markets, wrote in a note to clients. He called it "another trouble-free quarter with no execution issues."

But he added: "If there is one dark cloud it is the looming increase in pension expense next year, which we doubt has been fully reflected in consensus estimates."

Boeing shares ended 0.2 percent lower at $72.71 on Wednesday after rising as much as 3 percent earlier in the session.

The commercial aircraft business delivered 22 more jets in the third quarter than a year ago, due in large part to 787 deliveries, opening a second 787 assembly line, and ramping up output of 737 and 777 jets.-Reuters